District has not found interim CFO; delay in fiscal report postpones action on teacher salary increase

As February approaches, there is still no interim chief financial officer/assistant superintendent of fiscal and business services at Santa Monica-Malibu Unified School District to fill the shoes of Winston Braham, who resigned in November.

Superintendent Dianne Talarico says she is hoping to have an interim chief financial officer (CFO) “ASAP.”

“Our hope is, an interim [CFO] will take us through the ’07-’08 budget documents,” said Talarico at the school board meeting Thursday, January 18th.

Deputy superintendent Tim Walker said that the district has interviewed “at least four” individuals and is continuing to talk to others.

“We have two that we are interested in and are having conversations about their availability,” Walker said.

At the meeting, Talarico announced that she had signed a contract with School Services of California to search for a permanent chief financial officer for the district.

A permanent chief financial officer is not expected to come on board until the middle of the year.

DELAY IN TEACHER

SALARY ACTION — In November, the Fiscal Crisis and Management Assistance Team (FCMAT) was hired by the district to perform a comprehensive independent review of the district’s finances, including the preparation of a multi-year financial projection of the district’s general fund.

This happened after a tentative agreement was reached between the district and Santa Monica-Malibu Classroom Teachers Association (SMMCTA) teachers union that includes a five percent teacher salary increase, estimated to cost $7 million over the next three years.

Some, including members of the Financial Oversight Committee, were concerned with how the district would fund the agreement and some recommended that the district create a Financial Recovery Plan addressing how they could afford the agreement.

The tentative agreement would exhaust the district’s reserves and potentially put the district into a deficit starting in three years without substantial changes and budget cuts, some believe.

The Fiscal Crisis and Management Assistance Team’s findings and recommendations on district finances were to be available before the January 18th board meeting, and a discussion of the impact of these findings was to take place at the meeting. However, this item was pulled from the agenda at the last minute.

The Fiscal Crisis and Management Assistance Team was to make recommendations on a Financial Recovery Plan and also on Assembly Bill (AB) 1200 — which requires that a plan be submitted to the county by a school district once a tentative agreement has been reached with a teachers union.

Talarico said that, until Thursday, January 11th, she thought the district had a preliminary draft of the Fiscal Crisis and Management Assistance Team report.

“At that time, something came to light,” she said.

It was discovered that in 2005, $3 million was transferred from Fund 40 (for redevelopment dollars) to Fund 17 — a discretionary fund that is part of the general fund, whose use is at the discretion of the board. Talarico said this “caught her off guard” and “contaminated the numbers” that were used in the Fiscal Crisis and Management Assistance Team report.

“The FCMAT report is a precursor to developing the AB 1200 document and, if needed, any recovery plan,” said Walker. “The FCMAT report was prepared without the information related to $3 million from Fund 17 being from Fund 40, so the report will have to be recalculated with this information.”

The $3 million was moved from Fund 40 to Fund 17 in 2005 in order to meet the district’s mandatory reserve of three percent.

The mandatory reserve had been only 1.5 percent the previous year “because of significant cuts to school funding,” said teachers union president Harry Keiley.

But in 2005, the district’s mandatory reserve had to be back up to three percent. Because of this move of money from Fund 40 to Fund 17, “the dollars were not available for use as discretionary dollars,” Walker said.

This information was not taken into consideration when the Fiscal Crisis and Management Assistance Team received the numbers to prepare the report, which is why the report needs to be recalculated.

Talarico said she won’t make any guesses on when she’ll receive the adjusted Fiscal Crisis and Management Assistance Team report, but will let people know when she has the report in hand.

It is possible that the Fiscal Crisis and Management Assistance Team report could be discussed by the board as early as the next board meeting, and once that discussion takes place, the plan document required by AB 1200 could be presented, along with a recovery plan, if needed.

At this time, the tentative agreement between the district and the teachers union can be brought back to the board for discussion and action.

“I have full confidence that the tentative agreement will be ratified by the board and I’m mindful that the departure of the chief financial officer has created ongoing delays,” said Keiley. “We [teachers] have been patient, but our patience is not unlimited.

“At the end of the day, we’re teachers, and we’re very understanding. We’re committed to this district and we realize at this time, the district has some challenges, some of which are out of their control.”

Still, Keiley hopes things will be resolved in a timely manner, so it can be “put behind us,” he said. “I’d like to see us move forward.”

Keiley says Talarico sent him a letter “basically explaining to me in writing what she has said in public, and that is, with the departure of the chief financial officer and the consequences of that departure, there had been ongoing delays.”

Keiley said Talarico also expressed appreciation to the district’s teachers for their continued patience and understanding and said she’d keep the union fully appraised on all progress.